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Annales Universitatis Apulensis Series Oeconomica, 16(2), 2014, 324-347

324

COMPARATIVE ANALYSIS OF AUDIT REPORT TYPES ON THE

CONSOLIDATED FINANCIAL STATEMENTS

Attila Tamas Szora1

ABSTRACT: Audits carried out in accordance with International Standards on Auditing or

International Standards on Review Engagements and procedures undertaken by the independent

auditor made under the International Standard on Related Services are two totally different

commitments in terms of the independent auditor to express an audit opinion on a report. What

happens when on these types of commitment a comparative analysis is performed to highlight the

strengths and weaknesses of each, and not least the need to inform the beneficiaries meeting report

issued by the independent auditor.

The empirical study presented aims to present, the context of an atypical commitment, a solution of the

type of mission which may be subject to a commitment by the auditor, studying comparatively the

relevant standards applicable or audit missions as appropriate, based on ISA 700 Formulating an

opinion and reporting on financial statements, ISA 800 Special considerations - Audits of financial

statements prepared in accordance with special purpose frameworks, ISA 600 Special considerations -

Audits of group financial statements (including the work of component auditors), ISRS 4400

Engagements to perform agreed-upon procedures regarding financial information and ISRE 2400

Engagements to Review Historical Financial Statements and highlighting of relevant information to

users.

Key words: consolidated financial statements, audit opinion, ISA 800, ISRS 4400, ISA 700

JEL Codes: M40, M41, M42,

Introduction

In an audit concluded between the external auditor and the Beneficiary of the Report depending

on the type of commitment (based on ISA 700 / ISA 800 or ISRS 4400) are highlighted minimal

elements that it must include. The letter of commitment, document regulated by the Chamber of

Financial Auditors of Romania, document which is the basis of an audit is different depending on the

content standard as governing mission.

Therefore, commitment concluded between the external auditor and the Beneficiary under ISRS

4400 Engagements to perform agreed-upon procedures regarding financial information has as

objective, to our case, preparing the synthetic consolidated financial statements with the highlighting

of some relevant information for users and submission to Beneficiaries of the Report on the

achievement of agreed procedures.

Because the procedures performed by the independent auditor is not an audit or a review made

in accordance with International Standards on Auditing or International Standards on Review

Engagements, in this mission is not expressed any assurance on the financial position and result of

exercise as of 31.12.2013.

1Lecturer., University „1 Decembrie 1918“ Alba Iulia, Financial Auditor, e-mail:[email protected]


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In terms of the audit engagement agreement between the external auditor and the beneficiary,

the auditor's responsibility is to express an opinion on the financial statements based on our audit. This

will carry out the audit in accordance with ISA 800 Special considerations - audits of financial

statements prepared in accordance with special purpose frameworks and other applicable auditing

standards adopted by the Chamber of Financial Auditors of Romania. They require that the auditor

comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free of material misstatement. Also,“that auditors consider,

intuitively, qualitative factors besides the quantitative method when determining the materiality.

Highlighting these factors will allow for the transition from intuition to reason, with a positive impact

on the effectiveness of the auditing activity” (Irimie (Popa) Emil, et. al., 2013). The objective of this

engagement is auditing the consolidated financial statements of synthetic highlighting relevant

information for users and submission to beneficiaries of the audit report.

Research methodology

The purpose of the research is to highlight the differences between audit opinion resulting from

the audit engagement under ISA 700 Formulating an opinion and reporting on financial statements or

as the case ISA 800 Special considerations - audits of financial statements prepared in accordance with

special frameworks purpose and highlighting of relevant information to users, information audited by

an auditor and presented in a report issued under the International Standard on Related Services

('ISRS') 4400 Engagements to perform agreed-upon procedures regarding financial information, issued

by the International Federation of Accountants ("IFAC"). The opinion expressed in a report issued by

an external auditor is required to substantiate the Bank's lending decision of a group of companies.

In light of the investigative process that took place this paper is based on data interpretation

methods, so that it prevails the deductive approach from theory to practice, research inductive

interference consisting empirical study conducted at SC ALPHA SRL (the parent company) requesting

a loan from the bank, the credit is used and guaranteed jointly by the companies of a group of

companies among which there are, predominantly, affiliate relationships, and operational links. The

empirical study covers two consecutive financial years, exercises in which the commitment type is

based in the first year on ISRS 4400 and in the second year on ISA 800. Methods of analysis issues

temporal criterion consolidation process at a time, for the first fiscal year 31.12.2012 under ISRS 4400

and the second exercise 31.12.2013 under ISA 800, were predominantly longitudinal.

In terms of typology of the investigation, this paper is based on qualitative methods: theoretical

documentation through analysis and systematization of the literature, the study of legal and

professional rules main normative documents studied were the International Standard on Related

Services ('ISRS') 4400 Engagements to perform agreed-upon procedures regarding financial

information, ISA 800 Special considerations - audits of financial statements prepared in accordance

with special purpose frameworks and highlighting of relevant information to users, ISA 700

Formulating an opinion and reporting on financial statements, OMFP nr. 3055/2009 for Accounting

Regulations in accordance with European directives, user document analysis as a tool of qualitative

method - empirical study, which is to present individual financial statements and consolidation stages

of eliminating intra-group effects on the consolidated financial position and performance of the

consolidated entity, and synthesis found in drawing conclusions aimed at explaining and assessing the

situation found.

To reach our objectives, we formulated and tested a research hypothesis related to the

differences between audit :


326

Hypothesis H.1: The relevance of the audit and the users' understanding of the

groups auditors opinions on the consolidated financial statements are influenced by

the contracted and agreed type of the audit reports.

Hypothesis H.2: There are significant differences between auditors' opinions on the

consolidated financial statements resulting from the specific standard:

- International Auditing Standard ISA 700 "Forming an Opinion and Reporting on Financial

Statements"

- ISA 800 "Special Considerations-Audits of Financial Statements Prepared in Accordance with

Special Purpose Frameworks"

- International Standard on Related Services ISRS 4400 "Engagements to perform agreed-upon

procedures regarding financial information"

Theoretical background The interest of academic communities and of business environment in studying the audit of the

consolidated financial statements is largely manifested during the last years and is based especially

upon the social role of audit in an international context, dominated by profound reverberations of

macroeconomic volatility.

Significant dedicated literature upon the theme of audit quality was developed especially in the

last years and the favorite association is between the audit quality and the appropriate audit report

or/and the audit correct opinion on the financial statements (Neri and Russo, 2014; Elshafie and

Nyadroh, 2014; Chambers and Payne, 2011; Francis, 2011). Otherwise, this represents the main

assertion of our present work, regarding the direct correlation between the adequate audit opinion and

the audit quality, according to ISA 700, ISA 800 or ISRS 4400. Nowadays, debates on the audit reports

content are more actual than ever (Bedard et al., 2014), even the idea of content of disclosure items in

the audit reports is not new, but the ideas spread widely since the 2008 financial crisis.

Also, we remark the institutional context and the recent proposed changes to the International

Standards on Auditing (ISAs), related to the initiative of the International Auditing and Assurance

Standards Board (IAASB) to change in 2014 some relevant ISAs. The mentioned board approved in

March 2014 an Exposure Draft (ED), Proposed Changes to the International Auditing Standards

(ISAs)–Addressing Disclosures in the Audit of Financial Statements. This represents a complex essay

to promote disclosure, considering to be "a fundamental part of financial statements, seen as an

increasingly important way for preparers to communicate deeper insights about the entity’s financial

position and financial performance than is possible through the primary financial statements alone".

Table no. 1

Overview of the proposed changes and significant matters in the

International Auditing Standards ISAs

Proposed item International Auditing Standards ISAs

Clarifying the Meaning of Disclosures Proposed Change to ISA 200 Overall Objectives of the

Independent Auditor and the Conduct of an Audit in

Accordance with International Standards on Auditing

Guiding Auditors to Address Audit

Considerations Relating to Disclosures

Early in the Audit

Proposed Changes to

ISA 210 Agreeing the Terms of Audit Engagements

ISA 260 Communication with Those Charged with

Governance


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Proposed item International Auditing Standards ISAs

ISA 300 Planning an Audit of Financial Statements

Identifying, Assessing and Responding

to Risks of Material Misstatement –

Disclosure Considerations

Proposed Changes to

ISA 240 The Auditor’s Responsibilities Relating to Fraud

in an Audit of Financial Statements

ISA 315 Identifying and Assessing the Risks of Material

Misstatement through Understanding the Entity and Its

Environment

ISA 320 Materiality in Planning and Performing an Audit

ISA 330 The Auditor’s Responses to Assessed Risks

Clarifying and Elaborating Expectations

of Auditor when Evaluating

Misstatements and Forming on Opinion

Proposed Changes to

ISA 450 Evaluation of Misstatements Identified during the

Audit

ISA 700 Forming an Opinion and Reporting on Financial

Statements

Author processing

Source:Proposed Changes to the International Auditing Standards (ISAs)–Addressing

Disclosures in the Audit of Financial Statements, 2014

National studies on the audit on the consolidated financial statements were scanty until few

years ago, based on the incipient development of the group of companies in our economy. We can

distinguish only few incipient papers in the domain, based on the national accounting and audit

changes at the beginning of 2000 (Tiron-Tudor, 2007), that explored the stage of audit standards and

practice in Romania. That period was characterised through the legislative initiatives in order to

establish the legal framework in audit (the compulsory audit for the companies that have accomplished

some criteria regarding to total assets, turnover and number of employees for the previous year). As the

economic environment was developed, the scientific papers have grown (but insignificantly) after

2000, when the stage of knowledge increased, based on the necessity to create the tools for the

accounting and auditing of the group companies. Disclosure behaviour of the group entities was a

major theme in that period of the developing of the first group companies in Romania (Tiron-Tudor,

2010). The author was interested in the material disclosure harmonization for consolidated financial

statements and found that for the period 2006-2008 there were only 14 Romanian entities from the first

Bucharest Stock Exchange category which should present annual and intermediary consolidated

financial statements. This suggests the basic stage of the developing of the groups listed companies in

the mentioned period 2006-2008. The same situation was maintained and in the 2009, when the

number of companies that disclosed their consolidated financial statements was lower (Tiron-Tudor

and Ratiu, 2010).

Recent national approach (Müller, 2014) underlined the importance of the IFRS adoption since

2005 for the listed companies on a stock exchange (European), that contributed to the increasing of the

consolidated statements quality (value relevance). A marginal theme of the consolidated financial

reporting, regarding to goodwill recognition in Romania was approached by Baltariu and Cirstea

(Baltariu and Cirstea, 2012), that proved a high degree of harmonization. An important contribution in

the accounting of the group companies and in the preparing of the consolidated financial statements

belong to Sedki, Smith and Strickland (Sedki et al., 2014), authors that emphasize the differences

between IFRS and GAAP.


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Despite of the importance of the audit of the group of companies, the literature on the domain is

very scanty and the empirical studies insufficiently explore such main issue. In this context, our paper

intends to fill a gap in the theoretical delimitations and practices of the consolidated financial reporting

and auditing from Romania.

Regulatory aspects on the types of external audit engagements

Preparing of consolidated financial statements is included in the regulatory framework issued

nationwide, ie MFP Order nr.3055 / 2009 pt. 22 par. 1 "consolidated financial statements comprise the

consolidated balance sheet, consolidated profit and loss account and notes to the consolidated financial

statements. These documents constitute a whole” (par. 2). On consolidation procedures that are found

in this legislation we will not, because this part is exposed in an array of the empirical study on the

following pages. We note only that this section of the normative act is divided into three parts: the

consolidated balance sheet, consolidated profit and loss account and consolidated balance sheet

common provisions and profit and loss statement describing the methods of consolidation.Also, we

remark the opinion above “consolidatedfinancialstatements must beexclusivelypreparedaccordingtothe

International Financial ReportingStandards, withtheindicationthattherequirementregardingthe content

of paragraph 199 of IAS 1 shouldbeapplied in this case also. Thisprovisionshouldbeappliedeven for

theuncertaintiesassociatedtotheevaluationbase, especially of thetangibleassetsconsisting of

landsandbuildings, otherwise, thereis a major riskthe auditor of a component willnotdetect a deviation

in thefinancialinformation, whichcancause a significantdistortion of thegroup’sfinancialstatements”

(Tamas, Socol, 2011).

Regarding the types of regulations of engagement of the external auditor we will do next in a

tabular form a comparison of international norms (Table no. 2):

Table no. 2

Comparison of types of engagement of the external auditor to audit the consolidated financial

statements

ISRS 4400

”Engagements

to perform

agreed-upon

procedures

regarding

financial

information”

ISA 800

“Special

considerations

- Audits of

financial

statements

prepared in

accordance

with special

purpose

frameworks”

ISA 700

„Formulating

an opinion and

reporting on

financial

statements”

ISRE

2400

“Engagements

to Review

Historical

Financial

Statements”

ISA

600

“Special

considerations

- Audits of

group

financial

statements

(including the

work of

component

auditors)”

No insurance Wholesale

insurance, not

absolute

Absolute

insurance

Limited

insurance

Absolute

insurance

Report on

factual findings

Audit Report Audit Report Report review Audit Report

Letter of

commitment

Letter of

commitment

Letter of

commitment

Letter of

acceptance of

Letter of

commitment


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(varies the

components of

the letter)

the mission

High materiality

threshold

Low materiality

threshold

Low materiality

threshold

Low

materiality

threshold

Determined

from the small

group

Independence is

not mandatory

Independence is

mandatory

Independence is

mandatory

Independence

is mandatory

Independence

is mandatory

Agreed

procedures

ISA ISA ISRE 2400 ISA

Low coverage High coverage High coverage Low coverage High coverage

Use of the report

is restricted

Use of the

report is

restricted

Use of the

report is

restricted

Use of the

report is

restricted

Use of the

report is

restricted

Optional:

evaluation of the

internal control

system, risk

determination,

etc.

Optional:

evaluation of the

internal control

system, risk

determination,

etc.

Optional:

evaluation of

the internal

control system,

risk

determination,

etc.

Optional:

evaluation of

the internal

control system,

risk

determination,

etc.

Optional:

evaluation of

the internal

control system,

risk

determination,

etc.

Source: Author processing

The theme of the study is: audit mission based on agreed procedures versus audit engagement

based on ISA 800 and ISA 600 700 on synthetic consolidated financial statements performed by an

independent auditor in SC ALPHA LLC, the parent company.

„In order to reveal the “trusty image” of the financial position, the assets, the liabilitiesand of the

performance of an entity, it is necessary to adopt, know, understand and/or to apply theorresponding

accounting policies” (Danescu et. al., 2012).

Mission requested and accepted by letter of commitment is to achieve certain procedures related

to preparation of consolidated financial statements, emphasizing the following items of interest to the

companies included in consolidation and Beneficiary (the Bank):

- Strengthening intra-group transactions, both those of a commercial nature and those of other

nature (namely groups of intra-group transactions accounts, creditors, various debtors, amounts due to

associates, etc);

- Strengthening intra-group capital accounts (the shareholdings that a company has in another or

more);

- Consolidation of profit and loss of income and expense by eliminating intra-group

transactions;

- A consolidated highlight of short-term debt (less than 1 year - credit lines plus current portion

of term loans leases plus current portion plus interest for 1 year) and long term (over one year portion

of the loan plus the portion over 1 year lease).

The commitment of the auditor therefore consisted in achieving agreed-upon procedures related

to consolidated financial statements and the presentation of items of common interest to companies in

the group and common financier (the Bank). This consolidated information is intended for companies

included in consolidation and the Bank, to be able to formulate their own conclusions based on


330

procedures performed by the auditor on lending indicators of the group, consisting mainly in: the level

of capitalization of the group, return group activities, short-term debt, long-term debt and leverage on

individual and total group.

The objective of this engagement was represented by performing consolidated financial

statements (without audit of individual financial statements) with highlighting of relevant information

to users, and the submission to beneficiaries of a report on the achievement of agreed procedures.

Starting from paragraph A26 of ISA 700 which “Under ISA 200, the auditor is not in his report

compliance with ISAs unless the auditor has complied with the requirements of ISA 200 and all other

ISAs relevant to the audit.

According to ISA 200 - pt. 18 – “ The Auditor must comply with all ISAs relevant to the audit.

An ISA is relevant to the audit when it is in place and the circumstances in which ISA addresses exist.

It also requires that “ The auditor must respect each requirement of an ISA unless, in the circumstances

of the audit, the entire ISA is not relevant or the requirement is not relevant because it is conditional

and the condition does not exist. In exceptional circumstances, the auditor may consider it necessary to

depart from a relevant requirement in an ISA by performing alternative audit procedures to achieve the

aim of that requirement.

To identify the type of mission and the relevant standards applicable, we made a comparative

situation including the most important aspects of the relevant standards applicable to the type of

mission requested, in accordance with Annex 1.

Conclusions and limitations of the research

The only standard that applies in the context of the mission is ISA 800 as it responds to

requirements of ISA 200 - pt. 18 (quoted above) in that the auditor should comply with all ISAs

relevant to the audit, and an ISA is relevant to the audit when it is in force, and the circumstances in

which ISA is addressed there. It also answers the requirement for the auditor to comply with each

requirement of an ISA unless, in the circumstances of the audit, the entire ISA is not relevant or the

requirement is not relevant because it is conditional and the condition does not exist. Also there are no

exceptional circumstances for which the auditor may consider it necessary to depart from a relevant

requirement in an ISA by performing alternative audit procedures to achieve the aim of that

requirement (see table ISA 600 paragraph responsibility).

Drawing conclusions:

Hypothesis H.1: The relevance of the audit and the users' understanding of the groups

auditors opinions on the consolidated financial statements are influenced by the contracted

and agreed type of the audit reports – is validated.

Hypothesis H.2: There are significant differences between auditors' opinions on the

consolidated financial statements resulting from the specific standard – is validated.

The limit of the research is the assumption that commitment has limited applicability as a

specific type of commitment, but the proposed method has the advantage of extending and on other

special engagements in which the question of relevant standards applied.

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http://www.ifac.org/sites/default/files/publications/files/IAASB-Disclosures-Exposure-

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http://www.ifrs.org/


332

Annex 1 Comparison of relevant standards applicable to the type of mission (ISA 600, ISA 800, ISRS 4400 and ISRE 2400)

INTERNATIONAL

STANDARD ON

AUDITING 600

Response

mode

according to

the letter of

assignment

ISA 800 -

Special

purpose

financial

statements

(conformity

frame)

Response mode

according to

the letter of

assignment ISRS 4400

Response

mode

according

to the letter

of

assignment ISRE 2400

Response

mode

according to

the letter of

assignment

The objectives of the

auditor are:

(a) To determine

whether to act as auditor

of the financial

statements of the

Group; and

No; there is no

condition

(a) Mission

acceptance; Yes

The objective

of a mission

based on

agreed

procedures the

auditor is to

performing

related

procedures of

an audit nature

to which the

auditor, and

any third-party

entity entitled

agreed, and the

auditor's report

on factual

findings.

Yes; no

assurance is

expressed

The objective of a

review of financial

statements is to

enable the

practitioner to

determine

whether, on the

basis of

procedures which

do not provide all

the evidence

required in an

audit, noticed any

issue that causes

him to believe that

the financial

statements are not

prepared, in all

material in

accordance with

the applicable

financial reporting

The

requirement

does not fit in

terms of the

mission


333

framework

(negative

assurance).

(b) As the auditor of

the group financial

statements: No; there is no

condition

(b) Planning

and performing

of the mission;

and

Yes

- - - -

(i) To communicate

clearly with the

components auditors

about the scope and

timing of their work on

the financial

information

corresponding to

components and their

findings; and

Requirement is

not relevant

because it is

conditional and

the condition

does not exist

(c) Forming

an opinion and

reporting on

financial

statements.

Yes

- - - -

(ii) To obtain

sufficient appropriate

audit evidence on the

financial information of

the components and the

consolidation process to

express an opinion on

the extent to which the

group's financial

statements are prepared,

in all material respects,

in accordance with the

applicable financial

No; there is no

condition - - - - - -


334

reporting framework.

Resposibility

The group engagement

partner is responsible

for the management,

supervision and how to

conduct the group audit

engagement in

compliance with

professional standards

and applicable legal and

regulatory requirements,

and whether the

auditor's report that is

issued is appropriate in

the circumstances

In exceptional

circumstances,

the auditor may

consider it

necessary to

depart from a

relevant

requirement in

an ISA by

performing

alternative

audit

procedures to

achieve the aim

of that

requirement;

those

circumstances

don't exist;

There are no

provisions in

ISA 800;

Is applied ISA

600. (paragraph

9 of ISA 800

Special

considerations).

The auditor

should ensure

with

representatives

of the entity

and usually

other specified

parties who

will receive

copies of the

report of

factual

findings, that

there is a clear

understanding

of agreed-upon

procedures and

conditions of

the mission

Yes

The practitioner

should plan and

perform the

review with an

attitude of

professional

skepticism

recognizing that

circumstances

may exist that

would result in

materially

misstated financial

statements.

The

requirement

does not fit in

terms of the

mission

Acceptance and

continuation


335

In applying ISA 220,

the group engagement

partner will determine

whether they can

reasonably obtain

sufficient appropriate

audit evidence in

relation to the

consolidation and


the components

underlying the group

audit opinion.

Not applicable

In an audit of

special purpose

financial

statements, the

auditor shall

obtain an

understanding

related to: (a)

The purpose for

which the

financial

statements are

prepared; (b)

the targeted

users, (c) the

steps taken by

management to

determine

whether the

frame financial

reporting is

acceptable in

the

circumstances

Yes. ISA 210

(section 6

letters) requires

the auditor to

determine the

acceptability of

the financial

reporting

framework

applied in

preparing the

financial

statements

(compliance

framework)

Independence

is not a

requirement for

agreed-upon

procedures

based missions;

however, the

terms or

objectives of a

mission or

national

standards may

require the

auditor to

comply with

the

independence

requirements of

the Code of

Ethics for

Professional

Accountants

issued by the

IFAC

Yes

A letter of

assignment

confirms that the

practitioner

accepts the

appointment and

helps avoid

misunderstanding

regarding matters

as the objectives

and the scope of

the mission,

responsibilities of

the practitioner

and form of

reports to be

issued.

Yes

Terms of the mission


336


partner shall agree the

terms of the group audit

mission

Yes

There are no

provisions in

ISA 800;

It is applied ISA

210, "Agreeing

the terms of

audit,"

paragraph 6 (a)

and paragraph 9.

Items to be

included in the

letter of

assignment

include: listing

of procedures

to be performed

as agreed upon

between the

parties;

statement that

the distribution

of the report of

factual findings

will be

restricted to the

specified

parties who

have agreed to

the procedures

to be performed

Yes

Issues that will be

contained in the

letter of

assignment

include: The

objective of the

service that is

provided.

Management's

Responsibility for

the Financial

Statements. The

scope of the

review, including

references to the

International

Standard on

Review

Engagements

2400 (ISRE 2400

or standards or

relevant national

practices);

Unrestricted

access to any

books, documents

and other infor

mation required in

connection with

the review; A

sample report is

expected to be

Yes


337

taught; The fact

that it is not

certain that the

mission will

present illegal acts

or other non-

gularităţi, for

example, fraud or

defalcations that

may exist; A

statement that is

not conducted an

audit will be

Matte expressing

an audit opinion.

To emphasize this

and to avoid

confusion, the

practitioner may

also emphasize

that the review

mission will not

meet legal

requirements or

required by others

in the audit.

The overall audit

strategy and audit

plan


338


team will establish an

overall audit strategy

and the group will

develop an audit plan at

the group level

No

There are no

provisions in

ISA 800;

ISA 200

requires the

auditor to

comply with all

ISAs relevant to

the audit,

paragraph 9 and

18

The auditor

should plan the

work so as to

effectively

carry out a

mission

Yes

The practitioner

should plan the

work so as to

make an effective

mission

Yes

Understanding the

group, its components

and the environments

in which they operate

The auditor should

identify and assess the

risks of material

misstatement through

understanding the entity

and its environment

Yes

There are no

provisions in

ISA 800;

It is applied ISA

600

There are no

provisions in

ISRS 4400;

Not

applicable

necessary in the

circumstances in

order to achieve

the objective

review. The

procedures

required to

conduct a review

of financial

statements should

be determined by

the practitioner,

taking into

account the

requirements of

this ISRE,

relevant

professional

bodies, legislation

and regulations

Da


339

and, where

appropriate,

review the terms

of the engagement

and reporting

requirements .

There are no

provisions in

ISRE 2400;

Understanding the

component auditor No

There are no

provisions in

ISA 800;

Not applicable

There are no

provisions in

ISRS 4400;

Not

applicable

There are no

provisions in

ISRE 2400;

Not

applicable

Materiality threshold


team shall determine

materiality threshold for

the group financial

statements as a whole

when establishing the

overall audit strategy at

group level

No

In the case of

special purpose

financial

statements, as

those prepared

in accordance

with the

requirements of

a contract,

management

may agree with

the intended

users on a

threshold below

which

misstatements

Yes

There are no

provisions in

ISRS 4400;

Not

applicable

The practitioner

should apply the

same materiality

considerations as

applied when

expresses an audit

opinion on the

financial

statements

Yes


340

identified in an

audit will not be

corrected or

otherwise

adjusted. The

existence of

such a threshold

does not relieve

the auditor of

the requirement

to determine

materiality

threshold in

accordance with

ISA 320 for

planning and

conducting the

audit special

purpose

financial

statements.

Response to Assessed

Risks


341

The auditor should

design and implement

appropriate responses to

the treatment of

assessed risks of

material misstatement

of the financial

statements

Yes

There are no

provisions in

ISA 800;

It is applied ISA

330 "Auditor

Response to

Assessed Risks"

There are no

provisions in

ISRS 4400;

Not

applicable

If the practitioner

has reason to

believe that the

information

subject to review

may be materially

misstated, he

should perform

additional or more

extensive

procedures as

necessary in order

to express

negative assurance

or to confirm the

need for a

modified report

Yes

Determining the type

of activity to be

performed on the

financial information

of the component


342

An audit of one or more

account balances,

classes of transactions

or disclosures in

relation to the likely

significant risks of

material misstatement

of the financial

statements of the group

(significant component)

Yes

There are no

provisions in

ISA 800;

It is applied ISA

600

There are no

provisions in

ISRS 4400;

Not

applicable

The procedures

required to

conduct a review

of financial

statements should

be determined by

the practitioner,

taking into

account the

requirements of

this ISRE,

relevant

professional

bodies, legislation

and regulations

and, where

appropriate,

review the terms

of the engagement

and reporting

requirements .

Yes


team will conduct

analytical procedures at

group level (for

components that are not

significant)

It is applied ISA

600

There are no

provisions in

ISRS 4400;

Not

applicable

Involvement in the

work of component

auditors No

There are no

provisions in

ISA 800;

Cerinta nu este

relevanta

There are no

provisions in

ISRS 4400;

Not

applicable

There are no

provisions in

ISRE 2400;

Not

applicable

Consolidation process


343


team obtains an

understanding of

controls at group level

and the consolidation

process, including

instructions issued by

group management to

components

Yes - only in

terms of the

consolidation

process

There are no

provisions in

ISA 800;

It is applied ISA

600

Through

assimilation,

the group

engagement

team obtains an

understanding

of the

consolidation

process,

including

instructions

issued by group

management to

components

Da

There are no

provisions in

ISRE 2400;

It is applied

ISA 600

regarding the

consolidation

process

Subsequent events


team will develop

procedures to identify

events relating to those

components that occur

between the dates of the


the components and the

date the auditor's report

on the financial

statements of the Group,

which could lead to the

need to adjust the

presentation of the

financial statements of

the Group or the

adjustment thereof. Yes

There are no

provisions in

ISA 800;

It is applied ISA

600 and ISA

560 subsequent

events

There are no

provisions in

ISRS 4400;

Not

applicable

The practitioner

must investigate

events after the

financial s situaţi-

may involve

adjustment or

disclosure in the

financial

statements.

The practitioner

has no

responsibility in

performing

procedures to

identify events

occurring after the

date rapor-ment

Da


344

Review.

Communication with

the component auditor No

There are no

provisions in

ISA 800;

Not applicable

There are no

provisions in

ISRS 4400;

Not

applicable

There are no

provisions in

ISRE 2400;

Not

applicable

To assess the

sufficiency and

appropriateness of

audit evidence

obtained

No

There are no

provisions in

ISA 800;

The provisions

of ISA 600 and

ISA 500 Audit

Evidence are

applied

There are no

provisions in

ISRS 4400;

Not

applicable

There are no

provisions in

ISRE 2400;

The

provisions of

ISA 600 and

ISA 500

Audit

Evidence are

applied

Communication with

group management

and those charged

with governance of the

group Yes

There are no

provisions in

ISA 800;

Not applicable

There are no

provisions in

ISRS 4400;

Not

applicable

There are no

provisions in

ISRE 2400;

It is applied

ISA 600


345

Documentation. The

group engagement

team shall include in

the audit

documentation the

following:

Not applicable

The auditor

should

document

matters which

are important in

providing

evidence to

support the

report of

factual

findings, and

evidence that

the mission was

carried out in

accordance

with this ISRS

and the terms

of the

engagement

auditor should

perform

procedures

agreed upon

and use the

evidence

obtained as the

basis for the

report of

factual findings

Yes

The practitioner

should document

matters which are

important in

providing

evidence to

support the review

report and

evidence that the

review was

conducted in

accordance with

this standard.

Yes

(a) Analysis of

components, indicating

those that are Yes

There are no

provisions in

ISA 800;

Not applicable

There are no

provisions in

ISRS 4400;

Not

applicable -

Not

applicable


346

significant, and the type

of activities performed

on the financial

information of the

components.

(b) The nature, timing

and extent of the group

engagement team's

involvement in the work

performed by auditors

of components on

significant components

including, where

appropriate, the review

by the group

engagement team of the

relevant parts of the

components auditors'

audit documentation

and conclusions related. No

There are no

provisions in

ISA 800;

Not applicable

There are no

provisions in

ISRS 4400;

Not

applicable

-

Not

applicable

(c) written

communications

between the group

engagement team and

the components auditors

about the group

engagement team's

requirements. No

There are no

provisions in

ISA 800;

Not applicable

There are no

provisions in

ISRS 4400;

Not

applicable

-

Not

applicable

Specific issues

summarized in the

auditor's report


347

A statement that the

procedures performed

are meant to express an

absolute assurance

Yes

A statement that

the procedures

performed are

meant to

express a high

assurance, not

absolute

Yes

A statement

that the

procedures

performed do

not constitute

either an audit

or review and

therefore not

expressed any

insurance

Yes

A statement that

the procedures

performed are

reviewed and

therefore

expressed a

negative assurance

The

requirement

does not fit in

terms of the

mission